We Sued the DOL, and the DOL Blinked

By Fiona W. Ong, Mark J. Swerdlin & Parker E. Thoeni - Shawe Rosenthal LLP

July 18, 2018

Following this week's news of the U.S. Department of Labor formally pulling back the "Persuader" Rule, please find below a summary from Shawe Rosenthal LLP, the Worklaw®  Network member firm from Baltimore, Maryland.
 

Back in 2016, on behalf of the Worklaw®Network, a nationwide association of independent labor and employment law firms of which Shawe Rosenthal is a member, we filed suit against the U.S. Department of Labor to block the DOL’s new interpretation of the “persuader rule,” which is the advice exemption of the Labor Management Reporting and Disclosure Act (“LMRDA”). Several other suits were filed as well, a nationwide injunction was issued by a federal court in Texas, the DOL issued a proposed rule to rescind the new interpretation, and now, repeatedly citing the favorable decisions in our lawsuit and directly quoting the comments to the DOL’s proposed rule we submitted on behalf of Worklaw, the DOL has officially rescinded the rule.

As we explained in a previous blog post, the LMRDA requires reporting of certain information when an employer hires a consultant to persuade employees in the context of a union election or collective bargaining.  The DOL under the Obama Administration sought to expand the scope of the reporting requirement so greatly that it would have swallowed a statutory exemption from reporting for advice offered to employers behind the scenes – an exemption intended to allow employers to engage in confidential communications with their attorneys.  That exemption had been in place for over 50 years.

The Obama Administration’s approach was inconsistent with the statutory language of the LMRDA, as well as the U.S. Constitution.  Shawe Rosenthal attorneys Mark Swerdlin, Eric Hemmendinger, and Parker Thoeni, along with our colleagues at Seaton, Peters & Revnew, P.A. (Minneapolis, Minnesota), led the charge on behalf of Worklaw to prevent the Obama Administration from enforcing its misinterpretation of the LMRDA.  Parallel cases were also filed in Texas and Arkansas, and the Texas federal court issued a permanent nationwide injunction.

After President Trump took office, the DOL requested stays in the pending litigation, then announced last year that it would be issuing a Notice of Proposed Rulemaking (“NPRM”) to rescind the new rule. The NPRM also proposed considering a middle-ground between the long-standing rule and the Obama Administration’s misinterpretation of the LMRDA. We then provided comments to the DOL in support of the rescission, emphasizing that the DOL should rescind the rule and return to the prior interpretation rather than consider a middle-ground. And now, just as we requested in our comments to the DOL, the final rule is a return to what existed before.

In the DOL’s news release on the rescission, the Office of Policy’s Deputy Assistant Secretary Nathan Mehrens states, “For decades, the Department enforced an easy-to-understand regulation: Personal interactions with employees done by employers’ consultants triggered reporting obligations, but advice between a client and attorney did not…. By rescinding this Rule, the Department stands up for the rights of Americans to ask a question of their attorney without mandated disclosure to the government.”

As did we.